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On July 4, U.S. President Donald Trump signed the 'Great and Beautiful Act', which although pleased his supporters, has drawn warnings from analysts that it could leave China's President Xi Jinping smiling. The legislation is expected to increase the national debt by $4.1 trillion while eliminating clean energy subsidies, effectively leading the U.S. to withdraw from the renewable energy race, thus paving the way for China's dominance in these industries.

Rising Financial Concerns: According to an analysis by Barron's, if Xi Jinping's Communist Party were to draft a blueprint aimed at weakening America's potential over the next decade, it would be hard to imagine a better tool than Trump's 'Great and Beautiful Act' signed on July 4. The act primarily serves to placate Trump's base, extending tax cuts he promoted during his first term and temporarily exempting taxes on tips and overtime as part of his campaign promises. Additionally, the act reduces social welfare programs, aligning with long-standing conservative positions.

Concerns Over Future Fiscal Burden: Yet, the Republican Party may inadvertently be handing over a significant portion of the nation’s future to China. The Committee for a Responsible Federal Budget (CRFB) indicates that this act will increase the national debt by $4.1 trillion by 2034. Should many temporary provisions become permanent measures, the debt could soar to $5.5 trillion. Such extensive expenditure might force the U.S. Treasury to increasingly rely on Asian countries, such as China, which are the largest purchasers of U.S. government bonds.

Loss in the Clean Energy Competition: The bill's significant cuts to clean energy funding effectively mean that the U.S. is willingly stepping back from competition in solar, wind, and geothermal energy. Asian expert Jeff Kingston expressed that the U.S. is thus abandoning what he called a 'major growth market,' and instead embracing a 'loser's energy'. He states, 'Beijing will be celebrating this move.'

Multiple Economic Policy Risks: Meanwhile, Trump is cutting government jobs and increasing tariffs, which could push the world’s largest economy into recession. Although the labor market remains stable, the high import taxes set to be implemented next month pose a clear threat to employment prospects. Trump’s legislation also marks the largest cuts to the social safety net in decades, with millions set to lose healthcare.

Dollar's Dilemma: With the fiscal repercussions of tax cuts, the dollar’s value may take a substantial hit. Economist Robin Brooks from the Brookings Institution pointed out that recent 'counterintuitive price movements' for the dollar and U.S. yields are concerning. The dollar has fallen against other G-10 currencies this year, and Brooks notes that this decline is particularly worrisome since it occurs alongside rising U.S. interest rates, reminiscent of the 2022 crisis triggered by U.K. Prime Minister Liz Truss.

Concerns Over Economic 'Sinicization': As the Republican Party risks leading America into a debt crisis, Trump is simultaneously pushing a policy direction that could lead to a 'Sinicization' of the Federal Reserve. His ambiguous stance toward dismissing Federal Reserve Chairman Powell keeps global markets on edge. Additionally, Trump has attempted to silence media outlets that report the truth, which mirrors the style of the Chinese political bureau.

Conclusion: With the passage of the 'Great and Beautiful Act' and Trump’s shift towards more centralized policies, the Republican Party may inadvertently facilitate China's goals. Barron's noted that even as Trump trumpets 'America First,' he fails to mask the reality that Xi Jinping's China is celebrating a historic victory.